THE Pension Protection Fund’s levy for 2006-07 could be lower than the £575 million predicted, the fund’s chief executive indicated yesterday.
The fund is to reveal in the autumn a detailed estimate of its costs, which will take into account improvements in equity markets up to March 31, as well as the lump sums paid in and contingent assets used by companies to offset their pension fund deficits.
“The markets have moved a lot since October, when we did our original calculations,” Partha Dasgupta, the PPF’s chief executive, said. “The levy could be lower.”
The PPF opened in April 2005 to pay benefits to people who lost their life savings when their company collapsed with a deficit in its final salary pension scheme.
Funded by an annual levy on all companies with final salary schemes, the PPF will pay benefits up to £26,050 a year, with inflationary increases capped at 2.5 per cent, to people who have not yet reached their company’s retirement age.
Advertisement
People who have already retired will receive the full benefits promised by their company scheme.
Calculated by D&B, the ratings firm, 20 per cent of the levy is based on the size and deficit of a company’s pension fund and 80 per cent on the company’s financial strength. The levy is capped under legislation at £775 million.